ACCA Strategic Professional · Strategic Business Leader · Professionalism, ethical codes and the public interest
Amara, an ACCA member, is group financial accountant at Solis Energy. The CFO instructs her to classify a significant cost as an asset to meet a bank covenant, warning that her bonus and promotion depend on cooperation. Amara believes this breaches IFRS Accounting Standards. Applying the Code's approach, what should she do first?
Amara should refuse to be associated with misleading information, document her concerns and escalate internally, for example to the audit committee or CEO. Complying breaches integrity, while going straight to the bank would risk breaching confidentiality before internal resolution is attempted.
- AComply, because the CFO carries responsibility for the financial statements
- BResign immediately and inform the bank directly
- CEvaluate the threats, document her concerns, and seek to resolve the matter through internal escalation such as the audit committee or the CEO, while refusing to be associated with misleading informationCorrect
- DProcess the entry but disclose the disagreement in a footnote to the financial statements
Explanation
The pressure creates intimidation and self-interest threats to integrity and professional behaviour. The Code expects the member to avoid being associated with misleading information and to address the matter through appropriate escalation within the organisation, documenting it. Immediate disclosure to the bank would breach confidentiality without first exhausting internal routes, and complying would breach integrity.
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